Sales in the manufacturing sector are likely to witness a slowdown in the quarter ending December on account of lower unit realisation, a report said.
The expected moderation in growth has been attributed primarily due to lower unit realisation. “Due to the lower unit realisation, sectors like edible oils, steel, copper, aluminium are expected to report a slower growth in sales in the December quarter,” the report said.
“Although healthy, we expect the growth in net sales of the manufacturing sector to slow down to 26 per cent in the quarter ending December 2008 compared with 37 per cent in the September quarter,” the Centre for Monitoring Indian Economy (CMIE) said in its report.
The performance of the manufacturing sector is expected to deteriorate on the profit front as well, the report said.
While the apparel sector was expected to slip into the red, sectors like steel, copper, aluminium, alkalies, edible oils, automobiles and auto components were likely to witness fall in net profits, it said.
“We expect the manufacturing sector to continue to grapple with the problem of high raw material costs, while the sharp rise in the cost of borrowings amid the current liquidity crunch is also expected to hamper their profitability,” the CMIE said. Like in September, the December quarter is also going to end in red because of the huge losses by the refineries, the report said.
“We expect the refineries to incur net losses of Rs 23,485 crore in the December 2008 quarter. However, the losses of the refineries are expected to reduce on a sequential basis,” the report added.
